Should supply or demand drive sustainable products?

Should supply or demand drive sustainable products?

Given the lack of momentum on the global sustainability agenda in recent years, an atmosphere of mutual frustration between various levels of society is understandable. If nothing else, it inclines some to ask: Who do we turn to in order to drive the agenda forward?

When our panel of sustainability experts at GlobeScan is asked whether we need more supply of or demand for sustainability solutions, it tends to place the onus on pressure from consumers. We find that 41 percent believe that more consumer demand is required to accelerate progress on sustainability, while only 22 percent cite the need for more sustainable options from companies.

This view is more pronounced among corporate respondents, 49 percent of whom see the need for greater consumer demand, compared to 41 percent of government sustainability experts. While it is hard to argue with this sentiment, consumer demand can do only so much in isolation. Is it reasonable to place the burden on consumers in light of ongoing economic woes?

The ability of consumer demand to drive the agenda forward is dependent upon the consumer-producer relationship rather than just on consumers themselves. But cynicism and distrust of companies is rife at the present time, particularly in the developed world. Our research finds that while ethical consumerism has declined overall, those who engage in it by punishing companies through purchasing behavior or speaking negatively about them (as opposed to rewarding them for responsible behavior) are concentrated in developed countries, most notably Australia (46 percent), the United Kingdom (40 percent), the United States (38 percent), Canada (37 percent) and Greece (37 percent).

Lack of faith

National governments are seen also to have exhibited a disappointing lack of initiative on sustainability, and consumers have little faith in their will to lead. This only redoubles the need for companies to enable and inspire sustainable consumer behavior, both to take advantage of the opportunity presented by the lack of government action and to avoid regressing to compliance-based models of CSR (corporate social responsibility) and sustainability, which would be disadvantageous to both the company and the consumer.

So what is needed to bridge the divide between companies and consumers in order for consumer demand to create meaningful progress? Fundamentally, the consumer is left disabled if companies don't provide leadership, build trust, engage with stakeholders, and deliver the right offer to both satisfy and drive demand for sustainability.

In our annual Radar study earlier this year, shrinking minorities of consumers in many countries said enough sustainable products are on offer (see chart below).

Spain shows a steep rise in the perceived availability of sustainable goods until 2011, before a sharp fall in the past two years as economic depression had taken hold. In Germany the proportion who feel enough sustainable products are available has plummeted from 40 to 6 percent in less than 10 years. While this does point to an encouraging trend of increased demand on the part of the consumer, it is clear that companies are not keeping up.

Meeting demands

In many emerging markets, the story is different. Over the past two years Russia, Turkey, and India have each seen a pronounced rise in the number of people who say sufficient socially responsible products are available. However, there is a risk that similar patterns, such as in Germany, may reproduce themselves in these countries in the future if companies do not stay ahead on the supply side. In fact, recent polling of the major manufacturing economies of India and China shows a steep rise in demand for responsible product offerings across almost all industries (see chart below).

While the efforts of the likes of Puma, Unilever and a handful of others are widely admired, cross-pollination across companies and industries has not sufficiently scaled. With no more than one in three respondents in any polled market strongly feeling that enough socially and environmentally responsible products are available, it is imperative that more companies take heed. With a lack of leadership from the top and an increasingly demanding consumer base, new and bold approaches are needed.